Magazines.

A Cautionary Note About Business Reporting And Wall Street Hype

There is no hotter region of the media universe than business reporting. And, if you're an investor, there may be few more dangerous spots, too, according to the April 3 Business Week.

"The Hype Machine" is a terrific look at what is increasingly, and painfully, obvious to many who deal with the financial markets on a regular basis; namely, the extent to which the media and stock analysts are now involved in a deeply incestuous relationship of potential detriment to smitten news consumers.

The problem is that as newspapers and television, in particular cable TV led by the hugely successfully CNBC, become more immersed in Wall Street reporting at a time of grand prosperity, they and their armies of on-screen "experts" inevitably raise expectations since their drift is to tout certain stocks, not to underscore the need for deep caution, especially for the amateur investor.

"True, there have always been losers as well as winners in the stock market," write Marcia Vickers and Gary Weiss in a piece that does not avoid even chiding its own publication. "But never before has Wall Street raised expectations quite so high--and never before have the media joined in quite so willingly as cheerleaders and stock-pushers."

They make a strong case that the entire drift of much coverage, especially on television, is that even the little guy can get rich if he listens closely to the daily claims of experts, many of whom have huge gobs of self-interest in pushing certain stocks since they own those very stocks.

"In this world, nearly every stock is a buy," they write. "And the analysts, in turn, feed on another aspect of the hype machine--the cable-television outlets and the exploding number of personal-finance Web sites, such as TheStreet.comand Marketwatch.com, that feed investors' appetite for up-to-the-minute information."

There is no doubt that the quality of financial reporting has risen dramatically, though many newspaper financial sections, especially at smaller dailies, aren't much more than corporate bulletin boards. But it is hard to dispute that the Wall Street frenzy, furthered fueled by incessant advertising campaigns by the likes of Charles Schwab and Morgan Stanley Dean Witter, leaves the impression that only a nincompoop would miss out on our current gold rush.

The reality of investing, of course, is quite different and far more fraught with risk than many of the stock shills let on, and the magazine cites several good examples of individual investors' losing big time. And those arguably at fault are not just the growing armies of formerly unknown reporters who are now TV stars or the analysts who surface about as often as ads for Viagra, such as Abby Joseph Cohen of Goldman Sachs.

Indeed, the magazine concedes that it has played a part, too, in spurring the obsession with stocks and short-term gains. Its own "Inside Wall Street" columns focuses on three stocks each week, fitting nicely with the many personal-finance articles that can offer specific investment counsel.

For sure, there is a view, given mention here, that some of the criticisms reflect an older, more tradition-bound mindset. Wall Street and investing in general has been democratized, suggests CNBC President William Bolster, and old-timers don't like that.

Perhaps. But it is also clear that viewers will watch his network and, as soon as they hear somebody say something good about a stock, rush to buy shares. No shortage of investors may then be taken to the cleaners, suggest some studies.

Will these cautionary notes have an impact? Probably not, unless the economy tanks or some gargantuan ethical scandal envelops CNBC or another hot business outlet. But Business Week deserves kudos for leaving scant doubt that there's a problem.

Quickly: The April American Spectator includes the ever-droll Florence King reviewing a new autobiography by legendary former Cosmopolitan editor Helen Gurley Brown. She finds that Brown is "in a grotesque way inspiring, successful in wrestling introspection, along with fat and aging, to a standstill." . . . The April 18 Advocate inspects increasing activism by high school gays and lesbians, including a controversial gay-straight alliance encountering opposition from a California school district. . . . Forget about baseball season starting! As the April Field & Stream makes clear, it's "Trout Time!" and, thank goodness, offers counsel on fine-tuning your worm fishing.